June 7, 2023

Like a good neighbor, State Farm is there.  But the top home insurance firm in California, as measured in direct premiums written, has stopped accepting new homeowner insurance applications, citing the growing risk from wildfires and the rising cost to rebuild.  The company said it will continue to serve existing customers, as well as offer personal auto insurance.

The property insurance market is going up in flames.  State Farm is the largest property insurance company in the nation. The climate crisis is becoming a financial crisis, especially for Californians and Floridians.  Numerous studies show climate change increases the frequency and severity of extreme weather events, including widespread wildfires and storms that reach major hurricane status of Category 3 or above.  Over the past five years, wildfires have destroyed 25,000 homes in the state; in 2018, the most devastating year on record, Californians filed $11.7 billion in wildfire-related claims. 

State Farm’s decision in California is the latest development in what has been a growing trend in the property insurance industry nationwide, namely, insurance companies dropping homeowners.  Major insurers are backing out of new home policies in California.  Citing rising costs from raging wildfires and skyrocketing repairs, both State Farm and Allstate insurance companies say they are no longer offering home or business property insurance for new customers in California.   

You’re in good hands with Allstate?  Maybe not.  Allstate quietly stopped issuing new policies in California months ago, but didn’t announce the move until last week.  Allstate joined State Farm in deciding to halt sales of property and casualty coverage to new customers in California, saying it’s too pricey to underwrite policies in the state because of natural disasters.  Allstate was the fourth-largest insurer in California, according to the most recent 2021 state data. It earned $4.3 billion in premiums that year and incurred $2.6 billion in losses. 

In Florida, the state continues to investigate insurance companies underpaying policyholders and doctoring reports.  Dozens of property insurance companies in Florida have either entered receivership in the last few years, meaning they don’t have enough funding to pay out claims, or pulled out of Florida altogether and stopped insuring Florida homes. 

What happened in Florida was a harbinger for the rest of the U.S. Florida was a trailblazer, waiting too long to regulate an insurance industry in which companies cut back on homeowner policies and engaged in fraudulent, bad faith practices.  From coast-to-coast, insurance companies plundered profits and shortchanged policyholders.  The homeowner’s insurance crisis in Florida is a regulatory failure.  Had the market been properly regulated by the government and lawmakers, bad faith practices would have been halted.

As the hurricane season starts, the shaky property insurance market continues to plague Florida homeowners.  This is why anytime you experience property damage to your home or business, you should speak with an experienced and knowledgeable property damage trial lawyer.  At Corless Law Group, we make sure the insurance company does not take advantage of your predicament and offer a low settlement or delay and then deny the claim.  

These climate change crises can be curbed and the collapsing home insurance markets can be saved.  The insurance industry must be regulated, and government oversight will contribute to more fairness for all. 

Leave a Reply

Your email address will not be published. Required fields are marked *